Zambia's productivity in economy increases

Overall levels of productivity in Zambia have increased but productivity in the formal sector has declined by 3 percent a year, says new research from the Zambia Institute for Policy Analysis and Research.

In a presentation to a major conference to be held next week in Lusaka, Shebo Nalishebo, Senior Researcher at the Zambia Institute for Policy Analysis and Research (ZIPAR), will present new analysis which shows that productivity – the amount of output per worker – fell by an average of 3 per cent a year in the formal sector between 2008 and 2012.

Across the economy as a whole, the ZIPAR research shows that productivity increased by an average of 4.6 per cent a year, which was largely driven by improvements in the informal sector. Between 2008 and 2012, productivity in the informal sector increased by 5.4 per cent a year, albeit increasing from a low base. Boosts in productivity in the informal sector still mask significant differences: Mr. Nalishebo will show that informal sector firms produced eight times less output for each worker-hour than formal sector firms.

The presentation will be made at the High Level Stakeholder Dialogue Event - Zambia’s Way Forward: Job Creation to Promote Inclusive Growth - which is organised jointly by the Government of the Republic of Zambia (GRZ) and the Cooperating Partners Group (CPG). It will include speeches from a number of high profile speakers including Minister of Finance, Hon. Alexander Chikwanda, MP.

In his presentation, Mr. Nalishebo shows which sectors of the Zambian economy have performed most effectively in terms of productivity and which ones are struggling:

Mining experienced the highest productivity gains during 2008-2012: mining output per worker-hour increased by 15.4 per cent a year. The informal sector outperformed the formal sector in mining by 2.5 times (an average annual 28.3 per cent increase in productivity against an 11.3 per cent increase).

In contrast, the construction industry had the highest decline in productivity in both the informal and formal sectors. Despite substantial investments in the construction sector, making it one of the leading growth sectors of the Zambian economy, construction industry productivity declined by 12.9 percent a year between 2008-2012.

Other industries which showed large decreases in productivity include "wholesale and retail trade; repair of motor vehicles and motorcycles" and "manufacturing".

Other industries which recorded growth in productivity include transport and storage, financial and insurance activities, arts, entertainment and recreation.

This interim analysis is being presented by ZIPAR to help inform debate. The think tank will be continuing to work on productivity in the coming months. It will work on understanding why there appears to have been such large declines in productivity in some sectors of the Zambian economy. Understanding this better will be crucial to support Zambia to continue to grow its economy.

Shebo Nalishebo comments:

This study gives us a fresh perspective on the Zambian growth story especially that the data are broken down between the formal and informal economy. Understanding how to improve productivity is important because it will help Zambia’s economy continue to grow. Our new analysis has identified some productivity puzzles. Levels of output per worker in the formal sector of our economy actually fell between 2008 and 2012. The decline is quite significant in some sectors, such as construction. In contrast, productivity increased in the informal sector, including in agriculture, though productivity levels in the informal sector continue to be low.

To maximise future economic growth in Zambia, we need to better understand these productivity puzzles, including how they affect different sectors of our economy. This is exactly what future ZIPAR work will be doing.

Notes to Editors

1. The conference Zambia’s Way Forward: Job Creation to Promote Inclusive Growth is organised by the Government of the Republic of Zambia (GRZ) and the Cooperating Partners Group (CPG). The conference will take place at the Mulungushi International Conference Centre in Lusaka on November 24-25th. For more details see http://wayforward2014.com/

2. This interim research is based on analysing data from the 2010 Economic Census and the 2008 and 2012 Labour Force Surveys.

3. ZIPAR is a socio-economic think-tank whose mandate is to conduct research and policy analysis. ZIPAR was established by the Government Republic of Zambia (GRZ) with the support of the African Capacity Building Foundation (ACBF).